CMBS 2.0 Reps and Warranties Take Center Stage
For several months investment-grade bondholder, b-piece investor and special servicing (collectively, "investor") interests have been in the laboratory, working on a version of loan representations and warranties that protects their interests and cures the perceived ills of pre-recession CMBS loan underwriting. At the behest of the Commercial Real Estate Finance Council (CREFC), investor interests are now meeting with loan originator, loan seller and issuer (collectively, "issuer") interests to see if there is consensus for a set of so-called "model" reps and warranties. The notion is that issuers would be free to make whatever loan reps they chose, but would have to disclose differences between the model reps and theirs. There is an obvious negative presumption attached to reps that depart from the model set.
The Line Reports from Andrews Kurth's Mid-Year Real Estate Roundtable - Part II: Examining Investor Expectations and the Increased Role of Government
Continuing our series of posts from Andrews Kurth's 2nd Annual Mid-Year Real Estate Roundtable on June 22...
The Line Reports from Andrews Kurth's Mid-Year Real Estate Roundtable - Part I: "Trophies and Train Wrecks": Distressed Asset Strategies and Opportunities
Andrews Kurth hosted its 2nd Annual Mid-Year Real Estate Roundtable on June 22. The panel included Lindsey Wright from special servicer C-III Asset Management, Trey Morsbach of the real estate services firm HFF (Holliday Fenoglio Fowler), Bert Crouch of Invesco, an institutional investor and pension advisor, and Andrews Kurth partner Pat Sargent, who is also the immediate past president of the Commercial Real Estate Finance Council.
The Line Reports from the CRE Finance Council Conference: Distressed Asset Investors "Back on Offense"
Panelists from Brookfield Real Estate Financial Partners, Eastdil Secured, The Blackstone Group, Oaktree Capital Management and PCCP surveyed the state of the distressed asset market and the motivations of buyers and sellers.
Hot Topics in CMBS Loan Servicing (and Some Thoughts on Document Drafting for CMBS 2.0)
With this post I've decided to take a discussion from the MBA Servicing Conference last week ("Hot Topics in CMBS," which included panelists from CWCapital, KeyBank, Principal, Moody's and Situs and focused on current servicing problems associated with CMBS loans) and examine loan documentation, particularly what CMBS 2.0 has to correct.
The Line Reports from the MBA Servicing Conference: Multifamily Servicers Report Increased Watchlist Loans, Prepare for Wave of Maturing Loans
Panelists from Fannie Mae, Freddie Mac, Wells Fargo and M&T Realty Capital concurred that, with fewer refinancing options available to borrowers near-term, maturity defaults pose a looming problem that will initially spike in 2013. The number of stressed loans is mounting as well, pushing more loans to watchlist status and requiring greater servicer resources.
The Line Reports from the MBA Servicing Conference: Servicer Liability Issues
The Line is on the road this week at the Mortgage Banker's Association Servicing and Technology Conference. "Live from New York," so to speak.
The State Law Impacts Project - Part 2
In this post we'll include links to our current state law research.
First, there is a narrative summary of foreclosure procedures for each state (PDF).
The State Law Impacts Project - Part I
Over the next few blog posts, The Line will roll out a study evaluating differences in state laws related to enforcing commercial mortgage remedies. We call this our State Law Impacts Project (or "SLIP").
CMBS 2.0: Springing Escrows (and Springing Recourse)
The Line will periodically examine post-recession loan origination, servicing and securitization practices in a series we'll call "CMBS 2.0."
Let's talk about springing escrows at the outset, because experience has proven to be a stern taskmaster. The notion behind springing escrows is that if an unhappy event occurs after the loan is made—say a key tenant decides not to renew its lease or the loan's debt service coverage ratio (DSCR) drops below a certain threshold—the borrower is required to fund an escrow account serving as additional security for the loan. This way the loan is still more or less in balance—when funded, the borrower has more skin in the game to offset drops in value. In the usual CMBS 1.0 configuration, the borrower's failure to fund would constitute a loan default and expose the loan sponsors as guarantors to personal liability under the loan's non-recourse carve-outs.